* Gold in uptrend but cautious of thinning summer liquidity
* Spec drive offsets gold's diminishing appeal as safe haven
* SPDR Gold holdings <XAUEXT-NYS-TT> unchanged
By Chikako Mogi
TOKYO, Aug 5 (Reuters) - Gold inched down on Wednesday after
hitting a two-month high the previous day, with investors
pondering whether to push prices up if the dollar weakens further
as they become more wary of high price levels.
After breaking above a key resistance level that had held for
most of this year on Tuesday, and with other commodities such as
oil and base metals gaining strongly while Asian stocks and the
euro hit year-highs, gold is on an uptrend as funds pour money
into a broad range of assets.
By some technical measures, such as gold's relative strength
index (RSI), the market is becoming top-heavy while players are
growing cautious about liquidity thinning out during the summer
holidays, which could mean sharper swings in prices.
The RSI, a measure of whether the metal is overbought or
oversold, stood at around 69. The market views an RSI of 30 or
less as oversold and 70 or more as overbought.
The index topped 70 when the spot market tested resistance of
$955-$960 per ounce in the past three weeks, but held above that
level for just a few days when the spot rate neared $1,000.
"Market momentum is clearly on an upswing, giving the upper
hand to trend technicals over an oscillator analysis such as
RSI," said Shuji Sugata, a manager at Mitsubishi Corp Futures and
Securities.
"Stabilising markets across assets reduce gold's attraction
as a safe haven, as reflected in falling gold ETFs, but such a
negative aspect is overshadowed by the focus on speculative funds
flowing into markets broadly," he said.
Spot gold <XAU=> was down 0.3 percent at $963.85 per ounce as
of 0540 GMT, compared to New York's notional close of $966.75 per
ounce. Spot gold rose to a two-month high of $970.05 on Tuesday.
U.S. gold futures for December delivery <GCZ9> fell 0.3
percent to $966.5 per ounce, compared with $969.70 an ounce on
the COMEX division of the New York Mercantile Exchange. Gold
futures rose above $970 to a two-month high on Tuesday.
Sugata said gold would likely keep drawing support from the
euro's continuing strength after it topped $1.43.
The dollar hovered near its 2009 low against the euro on
Wednesday. The euro hit a year-high of $1.4445 earlier in the
week. []
Traders said while momentum may be building for gold to test
highs near $1,000 reached in early June, caution was warranted
over any slowing up in gains in stocks and commodities.
Investor demand for gold-backed exchange-traded funds
remained weak, with holdings of the world's largest such fund,
the SPDR Gold Trust <GLD>, steady at 1,072.87 tonnes as of Aug.
4. []
Holdings of the world's largest silver-backed exchange-traded
fund, the iShares Silver Trust <SLV>, fell 3.47 tonnes or 0.04
percent to 8,824.67 tonnes as of Aug. 4 after hitting a record
8,828.14 tonnes on July 31.
Japanese stocks eased 0.1 percent while Asian stocks outside
Japan <.MIAPJ0000PUS> were marginally higher.
PRICES
Precious metals prices at 0540 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 963.70 -3.05 -0.32 9.49
Spot Silver 14.59 -0.02 -0.14 28.89
Spot Platinum 1264.00 -1.50 -0.12 35.62
Spot Palladium 277.50 3.00 +1.09 50.41
TOCOM Gold 2952.00 25.00 +0.85 14.73 42544
TOCOM Platinum 3872.00 114.00 +3.03 46.00 21130
TOCOM Silver 445.40 11.60 +2.67 39.49 333
TOCOM Palladium 854.00 22.00 +2.64 55.27 573
Euro/Dollar 1.4397
Dollar/Yen 94.98
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa)
